Businesses overlook South-east Asia at their own peril

Asean is a powerful engine of growth in its own right. To pull out of the region in the face of geopolitical and trade tensions is a big mistake.

- Kurt M. Campbell and Alexander C. Feldman

South-east Asia is too often viewed through the lens of great power competition — a region caught between the United States and China. But Asean is not a geopolitical bystander. It is a dynamic and complex community of nations, with fast-growing economies and rising global influence.

In this new era where geopolitical tensions and commerce collide — over technology, trade and access to strategic minerals — businesses cannot afford to overlook a region that is home to 680 million people, twice the population of the European Union (EU), with an economy that is growing four times as fast.

With decades of combined experience advising governments and multinational companies across Asia, we believe that South-east Asia stands not as collateral damage but as a critical centre of opportunity.

Companies that lack a global South-east Asia strategy risk falling behind — losing market share, influence and supply chain resilience.

DIVERSIFYING BEYOND CHINA Nearly 25 years ago, when China first joined the World Trade Organisation, it became the factory to the world, with world-renowned companies like Apple, General Motors and Nike shifting their supply chains and manufacturing to Shenzhen, Chongqing and other Chinese cities.

By the early 2010s, rising labour costs, intellectual property concerns, regulatory issues and growing geopolitical tensions led multinational companies to begin shifting portions of their supply chains outside China, including to neighbouring South-east Asia.

The first Trump administration accelerated this shift with sweeping tariffs on Chinese goods. The Covid-19 pandemic further underscored the challenges of supply chain dependency on China.

For the past 15 years, this China Plus One strategy has been a cornerstone of corporate risk management that has benefited Asean nations.